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Guaranteed Payday Loans – Do they exist?

Although often searched for, there is simply no such thing as a guaranteed payday loan. In fact, any lender who ‘guarantees’ to accept loan applications is not being entirely honest with customers.

If you need money, it may be tempting to opt for what appears to be the easy option of a guaranteed payday loan. Consumers should be cautious, however, as any company offering a payday loan without performing a credit check may be trading unlawfully.

We understand that applying for a loan can be stressful, so here we’ve taken a look at why guaranteed loans are too good to be true and what genuine alternatives you can expect to find.

Are there any guaranteed loans for bad credit?

Guaranteed payday loans just don’t exist. This is because the Financial Conduct Authority (FCA) requires all lenders to perform credit checks on potential borrowers before issuing loans. Lenders are also subject to strict requirements to ensure that their practices are both ethical and transparent. In addition, they must make sure that all borrowers meet the basic eligibility criteria to be approved for a loan, namely that:

  • they are a UK resident aged over 18 years; and
  • they are employed or have proof that they receive a regular income.

So-called no credit check guaranteed payday loans and guaranteed loans in general are not regulated by the Financial Conduct Authority (FCA). This means that companies who do claim to offer them are unlikely to be authorised by the FCA or following their rules that protect borrowers.

Can you get a loan on benefits?

We recognise that it’s more difficult for people on benefits to find and access payday loans. This is because lenders review your monthly income and outgoings (amongst other things) in order to decide whether you can afford to repay the loan you have applied for. For people on benefits, your household income is likely to be significantly less than somebody who has a full-time job to bring in a more regular stream of cash.

If you’re on benefits and struggle with a bad credit history, even fewer lenders are likely to be willing to offer you a loan. Don’t panic though, as you may still be able to find a lender that is sympathetic to your circumstances. By using an online credit broker (more on this later) you may have a better chance of finding a loan that suits your needs. At Little Loans we provide a quick and simple eligibility calculator via our website, which will tell you if you’re likely to qualify for a loan without affecting your credit score.

If you get certain benefits and are thinking about applying for a payday loan, you may also wish to consider whether an interest-free budgeting loan from the government might be right for you.

Budgeting loans are designed to help people on low incomes to pay for essential or unexpected expenses. They can be used for a wide range of purposes from maintaining and securing your home through to maternity or funeral costs. Although they are not available to people who already receive Universal Credit, they are interest free and can be a useful alternative to payday loans for people who have low incomes or no income at all. For more information on budgeting loans, visit the government website.

How do lenders decide whether to say yes?

Whilst there are several common factors that all lenders look at when considering loan applications, each company will look at your circumstances in their own way. Where one lender might be unwilling to accept applications from borrowers with a low credit score, it might not be such an issue for another.

It’s because of these criteria that guaranteed payday loans don’t exist. Before you’ve completed their application form and shared all the necessary information about yourself, a lender has no way of knowing if you will meet their eligibility requirements.

Where can I go to borrow money fast?

There are a number of options available if you need to get a loan quickly and what’s right for one person might not be suitable for another. To make things simpler, we’ll look at two of the most popular methods of applying for a fast loan:

  • Applying directly to a lender for a payday loan; and
  • Using an online credit broker to apply for loans.

Applying to a directly to a lender

You may feel that the simplest way to apply for a loan is to go directly to the lender and in some ways this is true. There are lots of companies that offer fast, short term lending at a range of different rates and on different terms. In order for a lender to offer loans they must be authorised and regulated by the Financial Conduct Authority (FCA) and it is worth checking that any lender you are thinking of applying to is authorised. This will provide you with enhanced protection should anything go wrong.

Many bad credit loan providers host application forms on their websites which are often able to provide you with a lending decision in a matter of minutes. They will usually ask for information about your income and expenditure, along with details of your employment and home ownership status. When you have provided all of the necessary details, the lender will perform a credit check which may influence your credit score in future. Once they’re satisfied with the results of the credit check, the lender will then confirm the amount they are willing to lend to you and the money can often find its way to your bank account in just moments.

Using a broker to apply for a quick loan

With so many lenders on the market, the choice of who to apply to can sometimes be overwhelming. It can also be difficult to know if you’re getting a competitive rate when you apply to only one provider.

As mentioned earlier, lenders also have their own ‘preferred borrower’ profiles and as information about these is not readily available you may find yourself applying for loans with a finance company that would never approve your application in the first place simply because you’re not the type of customer they work with. It’s also worth keeping in mind that lenders conduct checks on your credit file at the point of application, and these checks can adversely affect your credit score.

As opposed to lenders, who most often deal exclusively in their own branded financial products, online loan brokers work with a panel of lenders to match borrowers with a loan that is right for their circumstances. Like lenders, online loan brokers are authorised and regulated by the Financial Conduct Authority (FCA), so you can rest assured that they are reputable and trustworthy companies.

How do credit brokers work?

We can’t speak for other online loan brokers, but at Little Loans our process is simple. Just enter your details into the quick application form on our website and we’ll identify the most likely lender to approve your loan. The good news is that our application form won’t influence your credit score – and whilst any lender you eventually apply to will conduct a full credit check, it’s often really useful to know whether you’re likely to be accepted at an early stage. You can then proceed to finish your application directly with the lender if you decide to continue with it.

We’ll always try to match you with the lender that offers the best interest rate for you and we’ll never charge you for our services.

I need a loan but keep getting refused, what can I do?

If you’re struggling to secure a payday loan, you might find it easier to apply via a broker who will work to help match you with a quick loan that fits your circumstances. Lenders look at all kinds of criteria when they make lending decisions and whilst some will accept borrowers with bad credit histories and low-income figures, others might simply refuse to.

It’s because Little Loans works with a panel of lenders that you can be sure the loan you’re applying for is competitive. Even if you have bad credit or if you’re on benefits, we work with lenders that specialise in providing loans for a range of unique customers and situations. If you choose to use our eligibility checker we will perform a quick and simple eligibility check and we’ll let you know what your chances are of getting a loan. If positive and you decide to proceed, you can fill out our online application form, where we’ll submit your information to our lenders and refer you, if successful, to the one most likely to accept your application. At this point the lender will carry out a credit check and this can affect your credit score, but only if you decide to apply on the lender’s site. If your application is successful, your loan may be paid into your bank account in just minutes*. This depends on the amount you want to borrow, along with the systems and processes used by your bank which unfortunately are outside of our control.

I need advice on my debts. Who can I speak to?

If you have a low credit rating or are struggling financially, it is important to consider how taking out further loans may impact you. If you are concerned about coping with increasing levels of debt and financial commitments the organisations listed below can provide you with free and impartial advice.

moneyadviceservice.org.uk

stepchange.org

nationaldebtline.org

*Once approved, your cash could be sent within minutes. The time that it takes for the cash to be received in your account will depend on your bank’s policies and procedures.

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Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender